Ford (F) Q2 US EV Sales Trail Only Tesla: Buy The Stock Now?
It seems that the whole narrative of a cooling electric vehicle (EV) market might just have been a tad bit exaggerated. At least, that’s what we can draw from second-quarter EV sales in the United States. Most of the auto biggies reported impressive U.S. EV deliveries.
The e-mobility giant Tesla TSLA delivered 443,956 cars worldwide in the second quarter, beating analysts’ expectations of 439,000 as compiled by FactSet. Just behind Tesla was the legacy automaker, Ford F, in terms of EV sales in the United States in the June end quarter. It was the #2 EV brand in the country, topping its crosstown rival General Motors GM, which itself reported record EV deliveries in the quarter under discussion.
While high prices and inadequate charging infrastructure remain concerns for zero-emission vehicles, the outlook for the EV market is more optimistic than previously believed. The long-term future of mobility clearly leans toward electrification. And Ford is making considerable strides to maintain a strong footing in the EV market.
In this write-up, we will take a look at Ford's robust EV sales, explore the factors likely to drive Ford in the long term and assess whether now is a good time to invest in its shares.
Ford’s Impressive Q2 EV Deliveries
The company sold 23,957 EVs in the second quarter of 2024 in the United States, marking a 61% jump year over year. In terms of models, sales of Mustang Mach E, F-150 Lightning and E-Transit totaled 12,645, 7,902 and 3,410 units, up 46%, 77% and 96%, respectively. Notably, F-150 Lightning remains America’s top-selling electric truck and E-Transit is the nation’s best-selling electric van.
In the first half of 2024, Ford delivered more than 44,000 EVs in the country, nearly 72% up on a yearly basis. Ford's growth allowed it to maintain a lead over GM in the U.S. EV market. GM delivered 21,930 EVs in the second quarter, bringing its total to 38,355 for the first half of 2024.
Ford Model e Unit Poised for Long-Term Growth
Ford's EV segment is strategically positioned for robust growth through a multifaceted approach. Key strategies include scaling, leveraging digital capabilities for manufacturing efficiency and emphasizing vertical integration by insourcing critical components. The company aims to increase integration by nearly 50% in next-gen utility vehicles. Addressing the substantial cost of batteries, Ford is prioritizing energy efficiency and aims for one of the lowest-cost batteries assembled in the United States.
Ford Blue & Pro Units Also Spark Optimism
In the Ford Blue segment, the company has tremendous growth opportunities, particularly with highly coveted models such as the F-150, the Maverick, the Bronco, and, undoubtedly, the Mustang. A wave of new products, including the new F-150, the Ranger, a brand-new Explorer, and Expedition and Navigator will boost revenues.
As for the Ford Pro segment, strong order books, increasing demand signals and the successful launch of the all-new Super Duty sets the stage for a highly promising future. The segment is well-positioned to leverage these factors, driving significant growth. We expect adjusted EBIT from the segment to increase 24.3% year over year in 2024, driven by favorable mix and volume strength.
Price Performance & Valuation
With shares down around 15% year to date, it might be an opportune time to buy the dip on the back of strong fundamentals.
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The company is trading cheap compared to the industry and carries a Value Score of A. F’s forward sales multiple sits at 0.31.
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Ford is Worth Buying Now
Although the Ford Model e unit is set to suffer losses this year, long-term prospects are promising enough. The Ford+ plan, emphasizing profit growth, e-mobility, and customer satisfaction, shows promise. High liquidity of more than $43 billion provides a solid foundation for investment in Ford+ priorities. To investors’ delight, the company targets distributions of 40-50% of FCF going forward, demonstrating its commitment to shareholder return. Amid all these tailwinds, the stock is witnessing northbound estimates for 2024 and 2025.
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Ford is trading above its 50-day and 200-day averages, indicating bullishness.
F Above 50 & 200 Day SMA
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Investors should consider parking their cash in Ford at its current price levels for solid long-term returns.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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